Making Use Of Frozen Assets

Important points to remember when making transactions with frozen securities.

Making Use Of Frozen Assets

In the face of escalating western sanctions that expanded into the stock market area brokers began to offer clients a new service - the ability to get rid of frozen assets. A prominent Russian daily periodical has published the article Discount Prices: Brokers Offer a Service to Sell Frozen Shares - Are such transactions safe and who benefits from them? 

Nikita Dolgiy, the managing partner of investment consulting and asset management firm Wolfline Capital, has contributed his knowledge of the situation in the published article:

"If the ownership rights to shares are registered with a foreign depository, for example, Euroclear, then it is highly likely that due to sanctions, the depository will refuse to register the transfer of ownership title to assets. Consequently, when concluding a sale and purchase contract, the parties must understand that without such a record of ownership transfer, the buyer cannot become the owner of the shares, and therefore, exercise all the rights he is entitled to as a shareholder.

In a real-world scenario participants in such transactions can spell out a provision in the agreement, deferring the transfer of ownership to securities upon making a corresponding entry with a foreign depository in the future, when sanctions are lifted. The law does not prohibit the parties from entering into stipulated agreements, but it is still worthwhile to remember that the parties to such settlements face certain risks", the executive pointed out.

The executive also pointed out that not all foreign securities available to Russians are subject to the imposed restrictions. For example, the blocking did not affect the trading of shares of Apple, Tesla, Virgin Galactic, and a number of other corporations.

To read the whole article, follow the link: https://iz.ru/1377451/roza-almakunova/sbrosovye-tceny-brokery-predlagaiut-uslugu-po-prodazhe-zamorozhennykh-aktcii

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