EU Issues Guidance on Russia Sanctions, 50% Rule
The EU updated its Russia sanctions guidance this week with new frequently asked questions, including several that clarify how it interprets its 50% rule and how asset freezes apply to entities owned by sanctioned people.
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Although the EU “directly” targets only people and entities on its sanctions list, it said those sanctions may also extend to the property they own. “If the listed person is deemed to own or control a non-listed entity, it can be presumed that the control also extends to the assets of that entity, and that any funds or economic resources made available to that entity would reach the listed person,” the EU said. It said this presumption may be “rebutted” case by case “if it can be demonstrated that some or all of its assets are outside the control of the listed person.”
The EU also said it looks at a company's “aggregate” ownership to determine whether the 50% ownership threshold is met. For example: If a company is 25% owned by one sanctioned person and 30% owned by another sanctioned person, the EU said, “the company should be considered as jointly owned and controlled by listed persons. Dealing with the company could then be considered as making funds or economic resources indirectly available to the listed persons.”