Regulation 4 Other financial and investment restrictions

In Chapter 2 of Part 3 (Finance), after regulation 18A (provision of financial services relating to foreign exchange reserve and asset management) insert—

“Investments in relation to Russia

18B.

(1)

A person (“P”) must not carry on an activity mentioned in paragraph (2) if P knows, or has reasonable cause to suspect, that P is carrying on such an activity.

(2)

The activities in this paragraph are—

(a)

directly acquiring any ownership interest in land located in Russia;

(b)

indirectly acquiring any ownership interest in land located in Russia for the purpose mentioned in paragraph (3);

(c)

directly acquiring any ownership interest in or control over a person, other than an individual, connected with Russia;

(d)

indirectly acquiring any ownership interest in or control over a person, other than an individual, connected with Russia for the purpose mentioned in paragraph (3);

(e)

directly or indirectly acquiring any ownership interest in or control over a relevant entity for the purpose mentioned in paragraph (3);

(f)

directly or indirectly establishing any joint venture with a person connected with Russia;

(g)

opening a representative office or establishing a branch or subsidiary located in Russia; or

(h)

providing investment services directly related to an activity referred to in sub-paragraphs (a) to (g).

(3)

The purpose mentioned in paragraph 2(b), (d) and (e) above is making funds or economic resources available—

(a)

directly or indirectly to a person connected with Russia; or

(b)

for the benefit of a person connected with Russia.

(4)

For the purposes of paragraph (3)—

(a)

economic resources are made available to a person connected with Russia only if that person would be likely to exchange the economic resources for, or use them in exchange for, funds, goods or services;

(b)

making funds or economic resources indirectly available to a person connected with Russia includes, in particular, a reference to making them available to a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by a person connected with Russia; and

(c)

funds or economic resources are made available for the benefit of a person connected with Russia only if that person thereby obtains, or is able to obtain, a significant financial benefit, and “financial benefit” includes the discharge (or partial discharge) of a financial obligation for which the person connected with Russia is wholly or partly responsible.

(5)

Paragraph (1) is subject to Part 7 (Exceptions and licences).

(6)

A person who contravenes a prohibition in paragraph (1) commits an offence.

(7)

In this regulation, the reference to a person (“P”) directly or indirectly acquiring any ownership interest in or control over a person or entity means—

(a)

P directly or indirectly acquiring any share in the person or entity;

(b)

P directly or indirectly acquiring any voting rights in the person or entity;

(c)

P directly or indirectly acquiring any right to appoint or remove a majority of the board of directors of the person or entity; or

(d)

P directly or indirectly acquiring any means of ensuring that the affairs of the person or entity are conducted in accordance with the wishes of P where it is reasonable, having regard to all of the circumstances, to expect that P would (if P chose to) in most cases or significant respects, by whatever means, be able to do so.

(8)

In this regulation—

• “branch” means, in relation to a person other than an individual, a place of business which forms a legally dependent part of that person and which carries out all or some of the transactions inherent in the business of that person;

• “investment services” has the same meaning as it has in regulation 16 (dealing with transferable securities or money-market instruments);

• “relevant entity” means a person, other than an individual, which has a place of business located in Russia but is not a person connected with Russia.”.