Temporary Management of Foreign-Owned Assets in Russia

Russia’s temporary-management regime creates a sharp distinction between legal ownership and effective control. A foreign investor may remain the formal owner of shares, participation interests or other property while losing the ability to vote, appoint management, determine business strategy, receive income freely or dispose of the investment.

The principal legal instrument is Presidential Decree No. 302 of 25 April 2023. Temporary management is not imposed automatically on every foreign-owned asset. It applies to property specifically designated by presidential decision. Rosimushchestvo ("Росимущество") acts as the default temporary manager, although another person may be appointed.

The factual question is therefore no longer simply who owns the asset, but who can vote, appoint, sign, receive income and control an exit.

Decree No. 302 does not itself transfer title to the state or to the temporary manager. The foreign investor generally remains the legal owner.

However, the state-appointed manager receives most of the powers normally associated with ownership, except the power to dispose of the managed property — that is, the investor may retain title while losing the practical ability to exercise the rights attached to it.

The word “temporary” should also be treated cautiously — the regime has no automatic expiry date, and temporary management ends only by a further presidential decision.

For a foreign court or investment tribunal, the formal retention of title may not be decisive. A prolonged loss of control, voting rights, access to income and ability to sell the investment may potentially be characterised as indirect expropriation, depending on the applicable law or investment treaty.

The manager exercises the powers of the owner, other than disposal, and must inventory and preserve the managed property. Management expenses may be paid from income generated by the asset.

The precise powers depend on what has been placed under temporary management.

Where the managed asset is a shareholding or participation interest, the manager exercises the corporate rights attached to it, including voting, obtaining corporate information and participating in the appointment of governing bodies.

Where the regime applies directly to real estate, equipment or another proprietary asset, the manager may operate, maintain and use that asset and enter into contracts necessary for its preservation.

The manager is not merely a contractual agent of the foreign investor. Its authority arises directly from the presidential decree, and it is not required to follow the investor’s instructions.

Such a manager exercises the voting rights attached to the managed shares or participation interest. The foreign owner does not vote in parallel.

If only part of the company’s capital is under temporary management, the remaining shareholders or members retain their own rights. Ordinary rules on quorum, voting thresholds, reserved matters and corporate procedure continue to apply.

Where the managed holding represents a controlling or 100% interest, the temporary manager can normally determine the outcome of shareholder-level decisions, provided that the required corporate formalities are observed.

The temporary manager does not automatically become the general director — he or she must still be appointed by the corporate body authorised under Russian law and the company’s charter. Depending on the governance structure, this may be the general meeting or the board of directors.

The manager may nevertheless control the appointment process by:

• voting to remove or appoint the general director;
• electing a new board of directors;
• causing the board to appoint a new executive;
• approving changes to the company’s internal governance.

The appointment must be properly documented and registered. An informal instruction from the temporary manager is not a substitute for a valid corporate resolution.

A Russian company is a separate legal entity. Placing its shares under temporary management does not make the state-appointed manager the automatic representative of the company.

Contracts remain signed and terminated by the general director or another duly authorised representative. The temporary manager normally influences contractual policy indirectly by controlling the shareholder meeting, board or appointment of the general director.

Existing contracts do not automatically terminate because temporary management has been introduced. However, the company may replace signatories, revoke POAs, change suppliers or terminate contracts where legal and contractual grounds exist.

Change-of-control clauses require particular attention. Temporary management may trigger a broadly drafted clause referring to loss of effective control, even though legal title to the shares has not changed.

Decree No. 302 does not contain a general prohibition on dividends.

The competent corporate body may declare dividends or distribute profit, subject to ordinary corporate and solvency requirements. The temporary manager exercises the votes attached to the managed holding and may therefore support or oppose a distribution.

However, three questions must be separated:

• whether the company may declare a dividend;
• who controls the decision;
• whether the money may be transferred to the foreign owner.

Even where dividends are lawfully declared, payment may be subject to Russia’s counter-sanctions rules, restricted accounts or special authorisations. Management expenses may also be financed from income generated by the managed property.

That is, a declared dividend does not necessarily mean that the investor will receive freely transferable funds.

They do not automatically terminate when temporary management is introduced.

An agreement may continue to regulate relations between its original parties, incl. voting arrangements, nomination rights, transfer restrictions, confidentiality obligations, put and call options and dispute-resolution provisions.

The difficulty is that the manager is usually not a party to the agreement. It is therefore not automatically bound by contractual promises concerning voting, board appointments or exit arrangements.

The agreement may still support claims between the original parties, but remedies may be limited by state intervention, mandatory Russian law, sanctions restrictions, impossibility of performance and difficulties of enforcement.

Exit rights may remain legally valid while becoming practically unusable.

The temporary manager may not dispose of the managed property. This restriction should generally cover sale, contribution to another company, pledge and comparable proprietary encumbrances.

The foreign owner’s position is less straightforward. Although title formally remains with the investor, a private sale or pledge cannot terminate temporary management. A buyer or secured creditor would not automatically obtain effective control over the asset.

The result is a form of public-law lock:

• the manager cannot sell or pledge the managed asset;
• the owner cannot deliver unrestricted control;
• a lender cannot assume that foreclosure will be possible;
• additional counter-sanctions approvals may be required.

A distinction must also be made between the managed shares and the assets owned by the Russian company itself. If only the shares are under temporary management, the company may still sell or pledge its own property through its general director and the required corporate approvals.

This creates a material risk: the shares themselves may remain unsold, while the economic value of the company changes through borrowing, guarantees, asset sales, reorganisations or related-party transactions.

Temporary management does not necessarily reduce an investment’s value to zero. The investor may retain legal title, residual economic rights and a possibility of regaining control.

Nevertheless, the asset cannot reasonably be valued as an ordinary, freely transferable controlling interest. A valuation should reflect:

• loss of voting and management control;
• uncertainty regarding the duration of the regime;
• restrictions on dividends and remittances;
• reduced marketability;
• political and regulatory risk;
• possible changes in the company’s debt and asset structure;
• the probability of restoration, exit or litigation recovery.

The valuation must also distinguish losses caused by temporary management from losses caused by sanctions, currency movements, market conditions or the investor’s own decision to withdraw from Russia.

Temporary management may potentially trigger political-risk insurance covering expropriation, deprivation, forced abandonment, currency inconvertibility or restrictions on transfers.

Coverage depends on the policy wording. Disputes may concern whether the loss is sufficiently permanent, when the insured event occurred, whether the waiting period has expired, whether the investor mitigated its loss and whether sanctions exclusions apply.

The regime may also support investment-treaty claims based on indirect expropriation, unfair treatment, discrimination or restrictions on transfers. Such claims are not automatic. The investor must establish treaty protection, jurisdiction, qualifying ownership and compliance with procedural requirements.

On the merits, the investor may rely on the loss of voting rights, management control, access to income and marketability. Russia may argue that title remains with the investor, the measure is temporary and preservative, and the business continues to operate.

The outcome will depend on the duration, economic effect, reversibility and practical consequences of the measure rather than its formal name alone.

A press report describing the asset as “seized” will not be enough. The claimant must prove both the legal measure and its actual consequences:

• share-register, depository and corporate-registry records proving ownership;
• the relevant presidential decree and all amendments;
• certified translations of Russian legal documents;
• notices from the temporary manager, registrar or depository;
• shareholders’ and board minutes;
• documents appointing or removing directors;
• evidence of rejected voting instructions or denied access to information;
• changes to bank mandates, powers of attorney and authorised signatories;
• financial statements, budgets and management accounts;
• dividend resolutions and restricted-account records;
• evidence of asset sales, guarantees, loans and related-party transactions;
• contemporaneous valuations and business plans;
• shareholders’ agreements, insurance policies and notices of claim.

Electronic evidence should be preserved with metadata and a clear chain of custody. Expert evidence on Russian corporate and counter-sanctions law may also be required.

Due diligence must go beyond confirming formal title. It should establish who actually controls the investment and whether post-designation transactions were validly authorised:
Designation risk. The target, its shareholders and relevant assets should be checked against Decree No. 302 and all subsequent amendments.
Governance. The charter, board structure, voting thresholds, reserved matters and procedure for appointing the general director must be analysed.
Authority. Material transactions should be traced through shareholder decisions, board approvals, POAs and corporate-registry records.
Value leakage. Particular attention should be given to related-party transactions, management fees, loans, guarantees, intellectual-property arrangements and disposals of operating assets.
Cash flows. The review should determine whether dividends were declared, where the money was credited, how management expenses were paid and whether special payment permissions exist.
Exit and claims. The investor or lender should assess whether presidential or governmental approvals would be required, whether insurance coverage exists and whether contractual or treaty claims can be preserved.

Transaction documents may require price adjustments, escrow arrangements, specific indemnities, enhanced warranties, information-access obligations and termination rights linked to temporary management.

Russia’s temporary-management regime does not necessarily remove the foreign investor from the title chain. Instead, it separates formal ownership from the practical ability to control and monetise the investment.

The investor may remain the owner, but the temporary manager votes, influences board composition and controls the appointment of management. Contracts remain within the authority of the company’s executive bodies. Dividends may be declared but may not be freely transferred. Shareholders’ agreements may survive while becoming difficult to enforce. The managed asset cannot ordinarily be sold or pledged, although the underlying company may still enter into transactions affecting its value.

The decisive questions are therefore not merely who owns the asset, but who controls it, who can authorise transactions, who receives the cash and whether an effective exit remains possible.

This article reflects the general legal position as at 16 July 2026 and does not constitute advice concerning any particular investment or dispute.

Investors facing temporary management of assets in Russia require a coordinated strategy covering corporate control, contractual rights, dividend payments, asset protection, evidence preservation and potential litigation. Russian advocate Vasiliy Tarasenko advises shareholders, beneficiaries and international companies on the legal consequences of temporary management, reviews corporate and transaction documents, assesses due diligence and enforcement risks, and develops practical strategies for protecting investments in Russian courts, foreign proceedings and international arbitration. Early legal involvement can help preserve valuable evidence, prevent further loss of control and strengthen the investor’s position in negotiations or future disputes.