Economically Significant Organisations in Russia: New 2026 Rules
From 15 July 2026, Russian law applies a new method for identifying indirect owners of economically significant organisations where shares are held through trusts, foundations and other foreign structures.
The law is stated as at 16 July 2026.
The law is stated as at 16 July 2026.
Foreign ownership structures often separate legal title, economic benefit and actual control. Shares in a Russian company may be held through several foreign companies, investment vehicles, trusts or private foundations, while the ultimate beneficiaries have no formally fixed percentage.
Federal Law No. 237-FZ of 4 July 2026, effective from 15 July 2026, has amended the Russian law on "economically significant organisations", commonly known as EZOs ("экономически значимые организации", "ЭЗО").
The reform introduces a specific method for calculating indirect ownership where a trust, foundation or similar foreign structure has no person formally recognised as its controlling person.
The amendment does not abolish foreign trusts or automatically transfer their assets. Its purpose is narrower but commercially important: to determine which persons may be treated as indirect owners of a major Russian business and what percentage of that business may be transferred to them directly.
Federal Law No. 237-FZ of 4 July 2026, effective from 15 July 2026, has amended the Russian law on "economically significant organisations", commonly known as EZOs ("экономически значимые организации", "ЭЗО").
The reform introduces a specific method for calculating indirect ownership where a trust, foundation or similar foreign structure has no person formally recognised as its controlling person.
The amendment does not abolish foreign trusts or automatically transfer their assets. Its purpose is narrower but commercially important: to determine which persons may be treated as indirect owners of a major Russian business and what percentage of that business may be transferred to them directly.
What is an economically significant organisation?
The EZO regime was introduced by Federal Law No. 470-FZ of 4 August 2023. It applies to a limited category of major Russian companies that are included in a special list approved by the Russian Government.
A company may qualify where it satisfies statutory requirements concerning its revenue, assets, workforce, taxes, clients or assets under management, and is important to the Russian economy or a particular sector. Relevant businesses may include systemically important banks, major industrial companies, critical information infrastructure operators, subsoil users, defence-sector businesses, large technology companies and city-forming enterprises.
The law also requires a sufficient level of indirect participation by Russian citizens or other qualifying Russian residents. The general threshold is 50%, although lower thresholds of 30% or 20% may apply in certain circumstances, including where Russian persons exercise corporate control or are subject to blocking sanctions.
Inclusion in the EZO list is decided by the Government. Information concerning certain listed companies may be restricted, meaning that ordinary public corporate searches may not always reveal the company’s EZO status.
A company may qualify where it satisfies statutory requirements concerning its revenue, assets, workforce, taxes, clients or assets under management, and is important to the Russian economy or a particular sector. Relevant businesses may include systemically important banks, major industrial companies, critical information infrastructure operators, subsoil users, defence-sector businesses, large technology companies and city-forming enterprises.
The law also requires a sufficient level of indirect participation by Russian citizens or other qualifying Russian residents. The general threshold is 50%, although lower thresholds of 30% or 20% may apply in certain circumstances, including where Russian persons exercise corporate control or are subject to blocking sanctions.
Inclusion in the EZO list is decided by the Government. Information concerning certain listed companies may be restricted, meaning that ordinary public corporate searches may not always reveal the company’s EZO status.
When can a foreign shareholder’s rights be suspended?
The main foreign entity targeted by the regime is a foreign holding company directly owning at least 50% of the voting shares or participation interests in an EZO and connected with a state regarded by Russia as taking unfriendly actions.
Foreign ownership alone is not sufficient. Proceedings require statutory grounds, such as:
Relevant evidence may include announcements that the group intends to leave Russia, termination of important contracts or compliance with foreign sanctions in a manner that materially disrupts the Russian company’s operations.
Applications are heard by the Arbitrazh Court of the Moscow Region. The proceedings are unusually rapid. Interim measures may restrict voting, disposal of shares and receipt of dividends before the dispute is finally resolved. A judgment suspending corporate rights is immediately enforceable, and an appeal does not automatically stop its implementation.
Foreign ownership alone is not sufficient. Proceedings require statutory grounds, such as:
- refusal or evasion by the foreign holding company to exercise its shareholder rights or duties in good faith;
- obstruction of the management or ordinary operation of the Russian company;
- conduct creating a risk of business suspension, liquidation or insolvency.
Relevant evidence may include announcements that the group intends to leave Russia, termination of important contracts or compliance with foreign sanctions in a manner that materially disrupts the Russian company’s operations.
Applications are heard by the Arbitrazh Court of the Moscow Region. The proceedings are unusually rapid. Interim measures may restrict voting, disposal of shares and receipt of dividends before the dispute is finally resolved. A judgment suspending corporate rights is immediately enforceable, and an appeal does not automatically stop its implementation.
Consequences of suspending corporate rights
Following a court judgment, the foreign holding company may lose the right to:
The shares are transferred to the EZO itself under a special statutory mechanism. This is not an ordinary sale. It is intended to permit qualifying indirect owners to obtain direct ownership of the Russian company.
Russian citizens and qualifying Russian residents who indirectly owned the EZO are generally required to apply for direct ownership. Other eligible indirect owners, including foreign persons, may have a right, but not always an obligation, to apply.
The statutory deadlines are short. The EZO must notify potential applicants, examine their documents, identify qualifying owners and calculate their respective interests. Disputes concerning the allocation may be brought before the Arbitrazh Court of the Moscow Region.
- vote and participate in shareholder meetings;
- receive dividends;
- convene meetings;
- exercise pre-emptive rights;
- dispose of the affected shares or participation interests.
The shares are transferred to the EZO itself under a special statutory mechanism. This is not an ordinary sale. It is intended to permit qualifying indirect owners to obtain direct ownership of the Russian company.
Russian citizens and qualifying Russian residents who indirectly owned the EZO are generally required to apply for direct ownership. Other eligible indirect owners, including foreign persons, may have a right, but not always an obligation, to apply.
The statutory deadlines are short. The EZO must notify potential applicants, examine their documents, identify qualifying owners and calculate their respective interests. Disputes concerning the allocation may be brought before the Arbitrazh Court of the Moscow Region.
Why trusts and foundations created a problem
Indirect ownership through ordinary companies can usually be calculated by multiplying the percentages held at each level of the corporate chain.
Trusts and foundations are more difficult. A trustee may hold legal title, while beneficiaries have no fixed entitlement to income or capital. A settlor may retain certain powers without having a direct right to distributions. A protector may influence decisions but own no trust property. Beneficiaries may be discretionary, contingent or subject to change.
Russian tax law normally determines participation in a foreign structure by considering whether a person is its controlling person. Control generally depends on whether the person can decisively influence the management of the structure’s assets, particularly decisions concerning the distribution of income.
However, some structures have no person who meets the formal definition of a controlling person. Before the 2026 amendment, this could make it difficult to calculate the indirect participation of beneficiaries, founders or contributors for EZO purposes.
The new law addresses that gap.
Trusts and foundations are more difficult. A trustee may hold legal title, while beneficiaries have no fixed entitlement to income or capital. A settlor may retain certain powers without having a direct right to distributions. A protector may influence decisions but own no trust property. Beneficiaries may be discretionary, contingent or subject to change.
Russian tax law normally determines participation in a foreign structure by considering whether a person is its controlling person. Control generally depends on whether the person can decisively influence the management of the structure’s assets, particularly decisions concerning the distribution of income.
However, some structures have no person who meets the formal definition of a controlling person. Before the 2026 amendment, this could make it difficult to calculate the indirect participation of beneficiaries, founders or contributors for EZO purposes.
The new law addresses that gap.
The new three-stage calculation
New Article 7(9.1) of Federal Law No. 470-FZ applies where none of the beneficiaries, founders or "participants" (members/owners) of the foreign structure is recognised as its controlling person.
Indirect participation must then be calculated using three methods in a prescribed order.
1. Entitlement to the structure’s assets
The first method examines each person’s legal entitlement to receive the structure’s assets.
This may include not only current rights to distributions, but also rights arising when the trust, foundation or other structure is terminated or liquidated. A beneficiary who has no fixed annual income entitlement may still have an identifiable right to capital upon termination.
The governing law and constitutive documents of the structure therefore become central. The analysis must establish what economic rights the person actually has, rather than merely who appears in a corporate register.
2. Value of contributions
Where the person’s interest cannot be calculated from an entitlement to assets, the law considers the value of the property contributed by each beneficiary, founder or participant.
Their participation is calculated proportionally to those contributions. Historical records of settlements, capital transfers, additions to trust property and contributions made through controlled companies may therefore determine the resulting share in the Russian EZO.
3. Equal allocation
Where neither asset entitlements nor contributions can be reliably established, the identified beneficiaries, founders and participants are treated as holding equal interests.
Equal division is therefore a last resort. It applies only when the first two methods do not produce a determinable result.
This rule may have significant consequences for family and investment structures that deliberately avoided recording fixed economic percentages. A lack of documentation will not necessarily prevent an allocation. It may instead lead to an equal division that does not reflect the parties’ actual intentions.
Indirect participation must then be calculated using three methods in a prescribed order.
1. Entitlement to the structure’s assets
The first method examines each person’s legal entitlement to receive the structure’s assets.
This may include not only current rights to distributions, but also rights arising when the trust, foundation or other structure is terminated or liquidated. A beneficiary who has no fixed annual income entitlement may still have an identifiable right to capital upon termination.
The governing law and constitutive documents of the structure therefore become central. The analysis must establish what economic rights the person actually has, rather than merely who appears in a corporate register.
2. Value of contributions
Where the person’s interest cannot be calculated from an entitlement to assets, the law considers the value of the property contributed by each beneficiary, founder or participant.
Their participation is calculated proportionally to those contributions. Historical records of settlements, capital transfers, additions to trust property and contributions made through controlled companies may therefore determine the resulting share in the Russian EZO.
3. Equal allocation
Where neither asset entitlements nor contributions can be reliably established, the identified beneficiaries, founders and participants are treated as holding equal interests.
Equal division is therefore a last resort. It applies only when the first two methods do not produce a determinable result.
This rule may have significant consequences for family and investment structures that deliberately avoided recording fixed economic percentages. A lack of documentation will not necessarily prevent an allocation. It may instead lead to an equal division that does not reflect the parties’ actual intentions.
The role of the trustee or asset manager
The amended law permits the use of:
In a trust, this will normally be the trustee. In a foundation, it may be the foundation council, administrator or another authorised manager.
The written opinion may explain the identity of beneficiaries, their rights to income or capital, the consequences of termination, the source of contributions and the legal effect of amendments, exclusions or disclaimers.
However, the manager’s opinion is evidence rather than a binding determination. The EZO must assess the available materials and calculate the indirect interests itself. Interested persons may challenge the resulting allocation in court.
- trust deeds and foundation charters;
- documents governing relations between founders, beneficiaries, participants and managers;
- records of contributions and distributions;
- a written opinion from the person managing the structure’s assets.
In a trust, this will normally be the trustee. In a foundation, it may be the foundation council, administrator or another authorised manager.
The written opinion may explain the identity of beneficiaries, their rights to income or capital, the consequences of termination, the source of contributions and the legal effect of amendments, exclusions or disclaimers.
However, the manager’s opinion is evidence rather than a binding determination. The EZO must assess the available materials and calculate the indirect interests itself. Interested persons may challenge the resulting allocation in court.
A broader look-through approach
The 2026 reform also expands the positions within a foreign ownership chain at which a trust, personal foundation or similar structure may be taken into account.
The structure may now be recognised at any of the principal stages used to trace ownership of the foreign holding company or the EZO. It may appear as:
Foreign groups must therefore examine the entire ownership chain. A trust cannot be ignored merely because it is situated several levels above the Russian company.
The structure may now be recognised at any of the principal stages used to trace ownership of the foreign holding company or the EZO. It may appear as:
- a shareholder in the foreign holding company;
- an owner of securities representing interests in that company;
- an intermediate investment vehicle;
- a controlling or upstream structure;
- another element of the chain through which indirect ownership is established.
Foreign groups must therefore examine the entire ownership chain. A trust cannot be ignored merely because it is situated several levels above the Russian company.
Former beneficiaries, founders and sanctions-related changes
The law is also intended to look beyond certain formal restructurings carried out after 24 February 2022.
A person may remain relevant where they lost the status of beneficiary or founder because blocking sanctions were imposed or threatened. Russian authorities may examine the person’s historical role, the source of the assets, the timing of the restructuring and whether the formal change was connected with sanctions.
The law may also treat an individual as a founder and controlling person where, before the above date, that individual ultimately transferred property or capital to the foreign structure, including through a controlled commercial company.
Removal from a trust deed, beneficiary list or foundation document may therefore be insufficient by itself. The EZO and the court may consider the economic substance and history of the arrangement.
A distinction must nevertheless be maintained between different provisions. The broader definition of an indirect owner may cover both former beneficiaries and former founders, but certain special attribution rules remain expressly directed only at former beneficiaries.
A person may remain relevant where they lost the status of beneficiary or founder because blocking sanctions were imposed or threatened. Russian authorities may examine the person’s historical role, the source of the assets, the timing of the restructuring and whether the formal change was connected with sanctions.
The law may also treat an individual as a founder and controlling person where, before the above date, that individual ultimately transferred property or capital to the foreign structure, including through a controlled commercial company.
Removal from a trust deed, beneficiary list or foundation document may therefore be insufficient by itself. The EZO and the court may consider the economic substance and history of the arrangement.
A distinction must nevertheless be maintained between different provisions. The broader definition of an indirect owner may cover both former beneficiaries and former founders, but certain special attribution rules remain expressly directed only at former beneficiaries.
Foreign law remains important
The new rules do not disregard the law governing the foreign trust, foundation or other structure. The first stage of the calculation expressly requires an examination of that law and of the legal relations among the relevant persons, namely:
In complex cases, a foreign-law opinion may be essential in practice. Russian lawyers, foreign trust counsel, trustees, administrators and beneficiaries should prepare a consistent position. Contradictory explanations may seriously weaken an application.
At the same time, recognition of a person as a direct shareholder under Russian law does not automatically resolve sanctions, fiduciary, tax or reporting issues in other jurisdictions. A trustee may be restricted from providing documents or recognising the transfer, even though the person is treated as entitled to shares in Russia.
- whether a discretionary beneficiary has an enforceable right or only an expectation;
- whether the settlor retains a reversionary interest;
- who receives the assets when the structure terminates;
- whether a disclaimer or exclusion was legally effective;
- whether post-sanctions amendments changed economic rights or merely formal status;
- whether property was contributed personally or through a controlled company.
In complex cases, a foreign-law opinion may be essential in practice. Russian lawyers, foreign trust counsel, trustees, administrators and beneficiaries should prepare a consistent position. Contradictory explanations may seriously weaken an application.
At the same time, recognition of a person as a direct shareholder under Russian law does not automatically resolve sanctions, fiduciary, tax or reporting issues in other jurisdictions. A trustee may be restricted from providing documents or recognising the transfer, even though the person is treated as entitled to shares in Russia.
What foreign structures should review
- The complete ownership chain. This should include registered shareholders, nominees, investment vehicles, trusts, foundations, settlors, contributors, protectors, beneficiaries and persons holding reserved powers.
- Control status. Each person should be assessed under the Russian Tax Code and the special EZO rules to determine whether they qualify as a controlling person.
- Economic entitlements. The parties should identify rights to income, capital and assets upon termination or liquidation.
- Contribution history. Records showing who originally transferred property to the structure should be collected and reconciled.
- Sanctions-related changes. Amendments, exclusions and restructurings made after 24 February 2022 should be examined carefully.
- Procedural readiness. Potential applicants must be prepared to act quickly, as both court proceedings and statutory application periods are short.
- Cross-border consequences. Russian corporate-law treatment must be coordinated with applicable sanctions, fiduciary, tax and disclosure requirements abroad.
From formal ownership to economic substance
The 2026 reform reflects a broader shift in Russian corporate regulation. In EZO cases, the decisive question is increasingly not who formally holds legal title, but who contributed the assets, who is entitled to their economic value and whose interest can be converted into direct ownership of the Russian company.
The new hierarchy is clear: rights to assets are considered first, contributions second and equal allocation only as a last resort.
For well-documented structures, the amendment may provide a clearer method for proving a precise indirect interest. For structures based on discretion, informal family arrangements or sanctions-driven changes of status, it creates a new risk: the economic allocation may be determined by the EZO itself and ultimately reviewed by a Russian court.
A foreign trust or foundation may continue to exist under its governing law. But for the purposes of ownership of an economically significant Russian organisation, uncertainty and lack of documentation may now directly affect who receives the Russian shares.
The new hierarchy is clear: rights to assets are considered first, contributions second and equal allocation only as a last resort.
For well-documented structures, the amendment may provide a clearer method for proving a precise indirect interest. For structures based on discretion, informal family arrangements or sanctions-driven changes of status, it creates a new risk: the economic allocation may be determined by the EZO itself and ultimately reviewed by a Russian court.
A foreign trust or foundation may continue to exist under its governing law. But for the purposes of ownership of an economically significant Russian organisation, uncertainty and lack of documentation may now directly affect who receives the Russian shares.
Faced the EZO Regime?
Foreign shareholders, trustees, founders and beneficiaries facing this problem require advice that combines corporate law, sanctions analysis, private wealth structuring and litigation strategy. Russian attorney Vasiliy Tarasenko advises foreign nationals on ownership tracing, assessment of controlling-person status, preparation of evidence concerning trusts and foundations, applications for direct ownership, protection of shareholder rights and disputes before Russian courts. Early legal review is particularly important where the ownership chain has been restructured after 24 February 2022 or where the parties’ economic rights are not clearly recorded in the governing documents.
