Companies that are 50% owned by sanctioned entities may be subject to EU sanctions

According to the document, the threshold for participation is set at 50%, although the previous version of the Best Practices established control of more than 50% of the organization. This criterion is consistent with the “50% rule” of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury.

The new rule also applies to cases where the joint ownership of two or more sanctioned persons in an asset exceeds a specified threshold: for example, if the company is 30% owned by one of them and 25% by the second.

At the same time, the updated recommendations will not affect most Russian organizations, as sanctioned entities usually reduce their shareholding to 49%, says Sergey Glandin, partner at BGP Litigation.

• In June 2024, the EU adopted the 14th package of anti-Russian sanctions, which included, in particular, new tools to prevent European companies from circumventing restrictions, as well as a ban on connecting to the Financial Message Transmission System (SPFS). A total of 116 individuals were subject to restrictions.