The Advisors' Blog

Countries & companies alike have been taking action against Russia, including with sanctions and pausing sales. Russia has also been taking its own actions – including blocking Facebook – which reinforces the point that companies need to be cognizant both of their actions and the Russian government’s actions. To that end, a member recently posted this question in our Q&A Forum (Topic #1403):

I saw a note that as of March 2, 2022, US companies can no longer engage in share transactions with Russian residents, unless expressly allowed by the Russian Government, which is unlikely to give permission. This encompasses both the issuance of shares for consideration and without consideration.

The implication is that any ESPP purchases, option exercises and RSU vestings should be suspended as of March 2, 2022.

I’m not able to find much more about this. Do you know whether it’s correct and where it is coming from?

Liz responded:

From what I hear, this is accurate. The issuance of foreign shares to Russian residents is prohibited by the new exchange control restrictions in Russia without Central Bank approval (Decrees No. 79 & 81). So, this restriction came from the Russian government. The risk is a fine to employees receiving those shares.

Companies should look at the plan documents to determine whether they allow for suspension of share issues / ESPP participation when not in compliance with applicable laws. Because there are a lot of restrictions on all types of financial transactions right now, cash settlement can be an alternative but would need to be carefully handled and properly accounted for.

– Emily Sacks-Wilner