UC Rusal, the second aluminum producer in the world, is considering re-registration in Russia. The Board of Directors instructed the company's management to prepare a detailed action plan to change jurisdiction, the company said on the Hong Kong Stock Exchange. Now UC Rusal is registered on the island of Jersey. The plans of UC Rusal to re-register in Russia were reported by Interfax referring to the source, they were confirmed by a federal official to Vedomosti.
Finally, shareholders of UC Rusal should approve the decision to re-register.
A representative of UC Rusal declined to comment. A person close to the company said that the decision is fully correlated with the plans of UC Rusal implemented within the de-Forsorification program, the implementation of which became possible as a result of the entry into force in early August of the Law on Special Administrative Regions (SAR). "Internal offshore" will be created on the Russian islands in Primorye and Oktyabrsky in Kaliningrad.
On August 16, a similar decision was taken by the board of directors of En + - the main (48.13%) shareholder of UC Rusal. The company announced preparations for the move from Cyprus to a special administrative area of its 100% energy subsidiary En + Holding. The company Deripaska became the first company that decided to move to Russian offshore.
Both companies of a businessman who got together with assets under the sanction of the US Treasury on April 6, specify in their reports that their decision is connected with the adoption of the law on the ATS in Russia.
Following the announcement of a possible change in jurisdiction, UC Rusal slightly went up in the Hong Kong stock exchange: by 0.47% to $ 4.12 billion.
Most likely, the change of jurisdiction is a kind of "plan B", believes the person familiar with the managers of UC Rusal. "If the parties fail to agree on the lifting of sanctions during the current process, the companies will become residents of Russian SARs, which will allow them not to disclose information about the beneficiaries and change the structure of the entire holding," he believes. The reaction of the US Treasury to the change of registration is difficult to predict, says Vedomosti's interlocutor: he usually reacts only to things that have already happened, and the change of jurisdiction is still at the stage of elaborating the issue. "Vedomosti" sent an inquiry to the US Treasury.
Most likely, a specific set of tax preferences will be determined when companies make a final decision on re-registration and which ATS they will move in, believes David Kapianidze, the head of tax practice at BMS Law Firm. "We must understand that companies of the level of En + and UC Rusal simply do not change their jurisdiction. The preferences necessary for their activities, either already should be, or the companies should be assured of the prospect of their introduction. Tax benefits in Russian offshore will be created specifically for the activities of these companies, "- says the lawyer. So far, most likely, there is a process of lobbying for re-registration, the final privileges are being discussed. And after this discussion, it will already be announced where and when the company will move, he believes. "The economic justification, of course, is associated with tax advantages for both companies and the budget. In the political sense, it is about security: abroad to remain in the current market conditions is more dangerous than in Russia, "Kapianidze adds. Perhaps, re-registration of companies will allow them to escape from certain prohibitions imposed by sanctions. As for the listing of companies, then it is much more significant impact of sanctions than the change of jurisdictions, the expert points out.