Rusal will move from Jersey to Russia

Oleg Deripaska's aluminum company UC Rusal has decided to re-register from the British island of Jersey to Russia. “After careful deliberation, the board of directors has decided that this is in the best interest of the company and shareholders,” the company said in a posting on the Hong Kong Stock Exchange.

Details

• was also being prepared for it in Russia . So far, UC Rusal has not officially acknowledged that the company is preparing to change jurisdiction, although government sources said that legislation on the creation of Russian offshores
• In April 2018, Deripaska and his companies, including UC Rusal and the GAZ group, came under US sanctions. The US Treasury called on counterparties to suspend all transactions with them, and investors to sell their shares and debt obligations. Otherwise, they themselves face secondary sanctions from the United States. Initially, the US Treasury planned to introduce these bans from August 5, but the deadline was repeatedly postponed (the new deadline is November 12 ). By this date, Vladimir Putin signed a package of bills that allows the creation of Russian offshore companies.
• The fact that Rusal will become one of their first residents was written by Kommersant in early June. The company, according to sources of the publication, was considering re-registration in the Kaliningrad region and Primorsky Krai - both regions should turn into internal offshores and are mentioned in Rusal's message posted on the stock exchange.

What are Russian offshore companies?

• Special Administrative Regions (SARs) were created on the Russky Islands in Primorye and Oktyabrsky Islands in the Kaliningrad Region.
• Only foreign companies and financial institutions can become residents on the islands. For the first six months, they will need to invest at least 50 million rubles in the country. Both requirements exclude mass re-registration in offshore companies for small businesses, but are ideal for oligarch companies that have fallen under sanctions.
• One of the main reliefs for Russian offshore companies is that companies in these zones will not have to pay taxes on profits from the sale of assets and on dividends received, and taxes on dividends paid are set at 5%.
• The US sanctions effectively prevent foreign companies from paying dividends to companies whose beneficiaries are sanctioned oligarchs. All money due to them should be transferred to a special account and frozen there.

Context

• So far, the sanctions have not led to a dramatic drop in UC Rusal's performance, but on the contrary - due to restrictions from the United States, aluminum prices in the world have risen, and the ruble has fallen, which only benefits exporters.
• For the first nine months of this year, UC Rusal reported that it had increased aluminum production by 1.7%. Sales over the same time fell by 5.4% to 2.8 million tons. But this did not stop the company from increasing revenue by 9.6% to $7.9 billion.
• The adjusted net profit of UC Rusal for the nine months of 2018 increased by 20.1% compared to the same period last year, to $873 million.
• Shares of the company in Hong Kong after the publication of financial statements jumped by 3.3%.

Anton Baev