Update: Russia Introduces New Rules for Dividend Payments on Depositary Receipts

Russian Federal Law No. 431-FZ dated November 28, 2025 has revised the regime governing depositary receipts of Russian issuers by permitting the resumption of new dividend payments under a Central Bank of Russia–administered mechanism and extending the claim period for previously unpaid dividends to run from the date of depositary receipt conversion rather than from the original declaration date. While these changes materially improve the position of depositary receipt holders, their practical application remains subject to applicable sanctions and regulatory compliance considerations.

In 2022, Russia adopted significant legislation changing the regime applicable to depositary receipts (DRs) of Russian issuers (as discussed in a previous LawFlash). This legislation generally prohibited Russian issuers from having their shares traded outside Russia through DRs and required Russian issuers to cease paying dividends attributable to DRs representing shares of Russian issuers. The continuation of DR programs, and therefore the payment of related dividends, was permitted only in exceptional cases where a specific authorization was granted by the Russian Government Commission.

Under the previous regime, holders of DRs were entitled to claim unpaid dividends only upon conversion of the DRs into the underlying Russian shares and only within three years from the date of the relevant dividend declaration. Upon expiry of that period, the right to receive such dividends was forfeited.

In principle, DRs could previously be converted either through standard conversion mechanisms contemplated by the relevant DR programs or through mandatory conversion procedures implemented under Russian law without reference to foreign clearing infrastructure. In practice, however, DR holders encountered material obstacles under both procedures (see our LawFlash in this regard), and currently no conversion options are available.

As a result, a significant number of DRs remain unconverted, preventing investors from meeting the formal prerequisite for claiming dividends while the statutory three-year limitation period for claiming dividends continued to run irrespective of the investor’s ability to convert.

NEW REGULATIONS

Russian Federal Law No. 431-FZ dated November 28, 2025 (Federal Law No. 431-FZ) has substantially changed the regulatory approach to dividends attributable to DRs and introduced the following key changes.

Resumption of Dividend Payments Attributable to DRs

Russian issuers are now allowed to resume dividend payments in respect of DRs, without the need to obtain specific governmental approvals. At the same time, the traditional distribution of dividends to ultimate DR holders through DR program sponsoring banks is not possible from a regulatory perspective.

Instead, such new dividend payments are governed by a separate decision of the Central Bank of Russia dated December 26, 2025 (the CBR Decision), under which DR holders are able to receive current dividends outside foreign settlement infrastructure.

Under Russian law, the underlying Russian shares for each DR program are recorded in a special DR program custody account opened in the name of the relevant program depositary bank and maintained by a Russian custodian (the DR Program Russian Custodian).

Pursuant to the CBR Decision, DR holders are entitled, within prescribed timeframes following the dividend payment date, to apply directly to the relevant DR Program Russian Custodian in order to receive dividends in their own name.

If a DR holder fails to participate in the applicable application procedure within the relevant timeframe, the corresponding dividends will, as a general rule, be forcibly credited to a Type C frozen Russian bank account opened in the name of the relevant program depositary bank with a Russian bank.

Extended Claim Period for Past Missed Dividends

The above procedure for claiming dividends through the relevant DR Program Russian Custodian applies only to dividends distributed after November 28, 2025.

By contrast, in respect of dividends declared prior to November 28, 2025, i.e., the entry into force of Federal Law No. 431-FZ, and not received by DR holders, recovery remains subject to the completion of the DRs’ conversion into the underlying Russian shares. However, under the new regime the limitation period for claiming such dividends now runs from the date of conversion of the relevant DRs rather than from the original dividend declaration date.

In practical terms, this means that the entitlement to receive such dividends is effectively preserved until the DRs are actually converted, and the claim period is deferred accordingly. As a result, DR holders no longer forfeit their entitlement to historical dividends solely due to the passage of time prior to conversion and retain the right to claim such dividends for as long as is required to complete the conversion process.

An important exception applies to the deferred claim period described above. The new regime does not apply to dividends that had already been reinstated by the Russian issuer as part of its undistributed profit as at the date of entry into force of Federal Law No. 431-FZ. Under Russian law, issuers are generally entitled to reinstate unpaid dividends as undistributed profit upon expiry of three years from the relevant dividend declaration date.

Accordingly, dividends declared in 2022—in respect of which the three-year recovery period expired by the end of 2025—may not fall within the scope of the new regime as such dividends may already have been reinstated by the issuer and are therefore no longer recoverable. That said, the applicable approach and the status of such dividends should be confirmed with the relevant Russian issuers.

IMPORTANT CONSIDERATIONS

The regulatory changes outlined above should be assessed by DR holders taking into account applicable sanctions and regulatory compliance considerations.

In particular, DR holders should note that a number of Russian issuers are subject to blocking sanctions in multiple jurisdictions, including the United States, European Union, and United Kingdom. Accordingly, before taking any steps to claim dividends DR holders should carefully assess the sanctions, licensing, and compliance implications applicable to their specific circumstances.