Sanctions, ADRs and Securities: Key Questions Answered for Investors and Shareholders in Russia

Quick answer: what investors need to know right now

Sanctions restrictions have fundamentally changed the procedure for handling depositary receipts and foreign securities in Russia. Holders of American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) have faced asset freezes, inability to receive dividends, and the urgent need to convert receipts into local shares. Our team provides daily support to investors and shareholders in resolving these issues and has prepared answers to the most frequently asked questions.

Three Key Changes for Depositary Receipt Holders in 2025–2026

Since January 1, 2025, non-qualified investors have been deprived of the ability to purchase foreign securities, including GDRs of Russian issuers.

The compulsory conversion of depositary receipts is ongoing: the timelines and procedures are determined by Presidential decrees and acts of the Bank of Russia.

Settlements on blocked assets are conducted exclusively in rubles through over-the-counter mechanisms.

Who is affected by sanctions and restrictions in the securities market

Restrictions apply to Russian investors holding depositary receipts in foreign depositories, to foreign shareholders of Russian issuers, as well as to professional market participants servicing sanctioned instruments.

When You Can't Do Without a Lawyer: Key Situations

Legal support is necessary when converting depositary receipts if the standard procedure has not been completed on time, when claiming missed dividends, when unblocking assets through Russian courts, and when assessing secondary sanctions risks.

Key Facts About Sanctions and Depositary Receipts

Regulatory Framework and Nature of Restrictions

The legal framework governing the circulation of sanctioned securities is formed by Presidential Decrees of the Russian Federation (in particular, Decree No. 95 of 05.03.2022, Decree No. 81 of 01.03.2022, and subsequent acts), decisions of the Board of Directors of the Bank of Russia, and regulatory acts of the National Settlement Depository (NSD).

Depositary receipts are derivative instruments certifying rights to shares of Russian issuers held in foreign depositories. Following the inclusion of NSD (National Settlement Depository) in the European Union's sanctions lists, the link between Russian and foreign infrastructure was severed. This led to the blocking of receipts and the impossibility of standard settlements.

Delisting and the Role of the NSD

Russian issuers delisted from foreign exchanges in accordance with Federal Law No. 114-FZ dated 16.04.2022. All transactions with depositary receipts have been suspended pending the completion of conversion. The NSD acts as the central settlement link: shares credited in exchange for cancelled receipts are processed through it. In disputes between participants in the custody chain, the NSD provides information on securities movements necessary for judicial protection.

Asset Blocking: Investor Rights and Protection Methods

Assets of Russian investors were frozen in European depositories — Euroclear and Clearstream — following the imposition of sanctions against the NSD (National Settlement Depository). Depositary receipts, shares, bonds, and other instruments held in accounts at these depositories are considered frozen — they cannot be disposed of without a license from the regulator of an unfriendly state.

Russian legislation provides several protection mechanisms:

filing a claim in an arbitration court for recognition of ownership of securities and compelling performance of obligations;

submitting an application to the Bank of Russia regarding a violation of investor rights;

participating in over-the-counter trading of blocked securities in rubles through authorized brokers;

filing applications for licenses from foreign regulators to unblock individual positions.

Practice shows that the best results come from a combined approach: simultaneous recourse to Russian courts and foreign regulators, supported by qualified legal counsel.

Converting Depositary Receipts into Russian Shares: A Step-by-Step Guide

Voluntary conversion was carried out upon application by the holder within the established timeframes through a Russian broker or depository. Mandatory conversion applies to receipts for which applications were not submitted on time: depositories write off the receipts from accounts and credit shares of Russian issuers in their place.

Order of application submission:

Contact the Russian broker or registrar where your account is held.

Provide documents confirming ownership of the depositary receipts as of the record date.

Wait for the depositary receipts to be debited and the shares to be credited to your custody account.

If the conversion was not carried out within the established timeframe, the investor needs to contact the NSD (National Settlement Depository) with a request regarding the status of the transaction and, if necessary, initiate legal proceedings. Particularly complex are cases where the depositary receipts are held in foreign depositaries to which there is no access — in such cases, rights are restored through the Russian judicial system.

Unpaid Dividends on Depositary Receipts: How to Claim

Dividends stopped reaching depositary receipt holders after the blocking of correspondent accounts between the NSD and foreign depositaries. Funds due to investors accumulate in special accounts but do not reach the ultimate beneficiaries.

The legal grounds for claiming missed dividends arise upon completion of the conversion: a shareholder is entitled to demand from the issuer payment of all accrued but unreceived dividends for the period of depositary receipt ownership. The procedure involves submitting a written claim to the issuer and the registrar, and in the event of refusal — filing a claim with the arbitration court. Russian arbitration court practice in this category of cases is developing actively, and a properly prepared evidentiary basis significantly increases the chances of a favorable outcome.

Legal Risks for Investors Under Sanctions Conditions

A "Type C" account is a special regime for recording funds received in favor of persons from unfriendly states. Funds held in such an account are restricted in their use: they cannot be freely transferred abroad. The restrictions may be lifted by a decision of the Government Commission for the Control of Foreign Investment Activities.

Risks of secondary sanctions affect Russian investors conducting securities transactions through intermediaries in third countries. Each transaction requires prior sanctions screening of the counterparty and the instrument.

The Role of a Lawyer When Working with Sanctioned Assets

Legal support is mandatory in the following cases: judicial recovery of blocked assets, conversion of depositary receipts under non-standard circumstances, collection of unpaid dividends, preparation of applications to the Government Commission, and interaction with foreign regulators.

Our team, led by attorney Erich Rat, provides a full cycle of legal support: from sanctions screening and legal analysis of the situation to representation before arbitration courts in Moscow. We work with both Russian and foreign investors, including residents of Germany and Austria, and conduct communication in Russian and German.

If your securities are blocked, the conversion of depositary receipts has not been completed, or dividends are not being received — contact us for a consultation.

Phone: +7 (495) 970-74-16

Email: advocate@ratanwalt.com

Address: Moscow, Rozhdestvenska str., 5/7, building 1

Frequently Asked Questions

What should an investor do if their depositary receipts are blocked in a foreign depository due to sanctions?

It is necessary to document the fact of ownership of the receipts, contact a Russian broker to assess the possibility of conversion, and if the standard route is not available — initiate legal protection of rights in a Russian arbitration court. In parallel, an application can be submitted to obtain a licence from a foreign regulator.

What are the deadlines set for the mandatory conversion of depositary receipts into Russian shares?

The deadlines are determined by Bank of Russia regulations and Presidential decrees. Mandatory conversion applies to depositary receipts for which applications were not submitted within the established period. Specific dates depend on the issuer and the depositary receipt program.

Is it possible to receive unpaid dividends on converted depositary receipts, and if so, how?

Yes. After the conversion is completed, the shareholder is entitled to submit a payment claim to the issuer and the registrar. In the event of refusal or inaction, the matter should be referred to an arbitration court with a claim for recovery of dividend arrears.

What legal protection mechanisms are available to Russian investors whose securities have fallen under sanctions?

Judicial recognition of rights to securities, appeals to the Bank of Russia, participation in over-the-counter trading of blocked assets in rubles, as well as filing applications with foreign regulators for licenses to unblock assets are all available options.

What is a type "C" account and how to lift the restrictions associated with sanctions?

Account type "C" — a special bank account for recording funds owed to persons from unfriendly states. Restrictions can be lifted by a decision of the Government Commission for Control over Foreign Investments on the basis of a substantiated application.

Is a lawyer needed for converting depositary receipts or reclaiming blocked assets?

With standard conversion through a broker, independent action is sufficient. However, in cases of missed deadlines, lack of access to a foreign depository, non-payment of dividends, or the need for judicial protection, the involvement of a lawyer with experience in sanctions law significantly increases the effectiveness of the actions taken.

How to interact with the National Settlement Depository when resolving securities disputes?

The investor has the right to submit a request to the NSD regarding the status of conversion transactions and the movement of securities. In the event of a dispute, the NSD provides statements and certificates necessary to substantiate a position in court. For the preparation of requests and the interpretation of responses, it is recommended to engage a lawyer specializing in sanctions law and securities regulation.

Internal links

Building sanctions compliance for business — https://www.ratanwalt.com/sanctions-compliance-for-businesses-in-russia-system-practical-steps

legal analysis of foreign agent status — https://www.ratanwalt.com/foreign-agent-status-ngos-media-legal-analysis-support-2026