The European Commission has clarified that reducing a company’s shareholding to below 50 percent can be treated as a way to sidestep sanctions, a stance that strengthens oversight over ownership structures and corporate control. This interpretation signals a deliberate, commission-wide effort to close gaps that could be exploited to maintain access to markets while appearing compliant. The assertion places significant emphasis on the mechanics of ownership and control, making it clear that even indirect pathways to dominance are subject to scrutiny. In practical terms, observers should anticipate heightened vigilance from regulators when a party attempts to reallocate shares or reorganize corporate arrangements in a manner that preserves decision-making power despite a minority stake.
Instituted under Article 5aa of Sanctions Regulation No. 833/2014, the rules prohibit Europeans from engaging in direct or indirect transactions with Russian entities that have state participation listed in Annex XIX. The prohibition extends to any company in which such state-participated entities hold more than a 50 percent interest. This framework creates a clear threshold for compliance and sets expectations for financial flows, trade activity, and partnership arrangements across the European market. By tying sanctions to both direct involvement and significant ownership, the regulation seeks to prevent circumvention through layered corporate structures or shell entities and to ensure that sanctions apply to the full ecosystem surrounding a designated entity.
Under the revised framework, the European Commission will evaluate entities acting on behalf of or under instructions from a sanctioned legal person if their stake has fallen to 50 percent or less. The commission has concluded that these measures are necessary because there have been suspicions that sanctions could be bypassed through changes in shareholding or through intermediate vehicles that retain control without a clear majority. This approach aims to close loopholes and ensure that control, influence, and the ability to direct strategic decisions remain aligned with the spirit of the sanctions regime. Compliance programs are therefore urged to scrutinize both formal ownership and de facto control when assessing risk in sanctioned jurisdictions.
Previously, the European Union had not yet endorsed the 12th package of sanctions proposals, reflecting the ongoing process of deliberation and alignment among member states. The evolution of the package illustrates how the EU continuously updates its policy toolkit to respond to evolving geopolitical and economic circumstances, with new measures designed to expand the reach of sanctions and to address emerging forms of evasion. Stakeholders across industries should monitor official communications for the adoption status of any new proposals and the practical implications for cross-border trade and investment.
In parallel, the United States Treasury has issued oil embargo guidelines that inform how allied and partner economies can structure their responses to sanctions pressures targeting energy sectors. The guidance emphasizes the importance of transparency, compliance, and the rapid adaptation of supply chains to maintain market stability while honoring sanction regimes. Entities engaging in energy-related activities should align with these guidelines to avoid inadvertent violations and to support coordinated economic enforcement efforts between transatlantic authorities. Such measures underscore the interconnection between EU and US policies in the broader framework of sanctions enforcement and energy security.