‘Making funds available’: EU publishes Russia sanctions FAQs

The Council of the European Union has published, 9 November, a collation of answers to Frequently Asked Questions on EU asset freezes, and on the prohibition on making funds and economic resources available to designated parties.

While most of the FAQs have been previously published, the document also introduces a new question, thus:

‘What measure (if any) should competent authorities adopt in respect of listed shareholders with qualifying holdings in an EU bank? Is the freezing of voting rights appropriate/required? In that case, should a proportionality approach be applied, e.g., by starting with increased monitoring of governance?’

The guidance offered is as follows:

‘Shares qualify as “funds” and therefore must be frozen if belonging to, owned, held or controlled by a listed person. Accordingly, this means that it is prohibited for the listed person to exercise any voting rights which could lead to any change in relation to these shares (e.g., in their volume, amount, location, ownership, possession, character, destination etc.). Either way, since they can be used to obtain funds, goods or services, voting rights as such can be considered an intangible economic resource. This means they should be frozen, i.e., prevented from being used to obtain funds, goods or services in any way. Therefore under no circumstance nor for any purpose may listed shareholders exercise directly or indirectly their voting rights in a company or fund. Voting rights must be fully frozen.’

For the document in its entirety, see: https://finance.ec.europa.eu/system/files/2022-11/faqs-sanctions-russia-assets-freezes_en.pdf