Russia introduces restrictions on the activities of foreign auditors

Under Decree of the Government of the Russian Federation No. 622 dated 19 April 2021 “On restrictions on the provision of information and documentation to an audit organization, an individual auditor“ (“Decree”), starting from April 29, 2021, a wide list of audited Russian entities will cease to disclose information, that is normally subject to mandatory disclosure requirements, to audit organizations which are owned or controlled by foreign individuals, stateless persons, foreign legal entities, international companies or are part of the same group with such persons (“Foreign auditors”).

In a nutshell, by virtue of the Decree Russian persons that are subject to restrictive measures (such as foreign sanctions) or which are otherwise prohibited from disclosing their ownership and other sensitive information (e.g. enterprises from the Russian defense sector, strategic banks, etc.) shall not disclose the said information, such as their shareholding and management structure, information on affiliated persons, information on the issuer’s subsidiaries, to Foreign auditors. In particular, the following categories of Russian persons are covered by the Decree: (1) issuers of securities that are subject to restrictive measures or may be subject to restrictive measures resulting from the disclosure of sensible information, (2) banks that are subject to restrictive measures, (3) non-bank credit institutions and specialized depositories and insurers whose shareholders are subject to restrictive measures, etc.

The types of information not subject to disclosure may differ depending on the activities carried out by the organization. For example, banks that are subject to restrictive measures or related to the Russian defense sector will no longer disclose information about their owners and members of management bodies to Foreign auditors.

The full list of information that shall not be disclosed to Foreign auditors are specified in the Decree.