Reminder: Compliance with US Prohibition on New Investment in Russia (26/23)
Nasdaq as a global business is committed to compliance with all applicable economic sanctions laws, including those of the European Union and the United States. Nasdaq notes the ongoing changes in sanctions related to Russia and relevant US government guidance related to such sanctions. For example, under US sanctions administered by the US Department of Treasury’s Office of Foreign Assets Control (“OFAC”), it is prohibited for any United States citizen, lawful permanent resident, entity organized under the laws of the United States (including foreign branches), or any person in the United States (collectively, “US Persons”) to engage in new investment in Russia as of April 6, 2022 under Executive Order 14071.
On January 17, 2023, OFAC updated its Frequently Asked Question (“FAQ”) 1055 to clarify aspects of the new investment prohibition as it applies to the purchase of debt or equity securities in non-Russian entities. Per the updated FAQ 1055US Persons are not prohibited from purchasing equity in entities located outside of Russia, “provided that (i) such funds are not specifically intended for new projects or operations in the Russian Federation and (ii) the entity located outside the Russian Federation derives less than 50 percent of its revenues from its investments in the Russian Federation”. For purposes of assessing compliance with the prohibition on new investment, US Persons may reasonably rely on information available to them in the ordinary course of business, such as an entity’s most recent quarterly or annual report. In assessing the 50 percent threshold for an entity’s revenue, revenues derived from the commercial sale of goods or services by an entity located outside of Russia to persons in Russia should not be included, as such activities are not considered “new investment” in Russia.
Examples of transactions OFAC considers to be “new investment” include:
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Purchase of debt or equity interests in an entity outside of Russia that derives 50 percent or more of its revenue from ownership of real estate, a mine, or other physical property located in Russia.
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Purchase of debt or equity interests in an entity located outside of Russia that derives 50 percent or more of its revenue from ownership of a subsidiary located in Russia.
Examples of transactions OFAC does not consider to be “new investment” include:
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Purchase of debt or equity interests in an entity located outside of Russia that derives less than 50 percent of its revenue from ownership of a subsidiary or physical operation in Russia.
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Purchase of debt or equity interests in an entity located outside of Russia whose revenue is exclusively derived from the commercial sale of goods or services to persons located in Russia.
US Persons are not prohibited from selling or divesting debt or equity securities issued by affected entities to a non-US Person, and US financial institutions may clear, settle, and otherwise serve as market intermediaries in such divestment transaction on the secondary market.
Nasdaq Stockholm AB reminds members that they are responsible for confirming their compliance with applicable sanctions restrictions, including conducting their own due diligence and other measures as appropriate. Members are responsible for confirming whether US sanctions jurisdiction would apply to their activities on the Nasdaq Stockholm AB operated markets and ensure that such activities are in compliance with applicable sanctions restrictions.
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