Following public announcements and Opinions and answers to specific questions received from European Commission, regarding the Article 5aa of EU Council Regulation 428/2022, the Ministry of Finance discloses the following:
- This provision prohibits the conclusion of new contracts after 16 March 2022 with the legal persons contained in the Annex. The prohibition also applies to the execution of existing ones after 15 May 2022 or to the provision of any sort of economically valuable benefit (such as services or payments), even in the absence of such contractual relationship. The article does not prescribe the consequences that the prohibition should have on any ongoing contractual relations; an EU operator should take the measures necessary in light of its specific situation to halt its dealings by the end of the wind-down period on 15 May 2022.
- The prohibition under Article 5aa prohibits to engage directly or indirectly in any transactions with the entities named in Annex XIX but transactions with these entities’ subsidiaries do not necessarily imply de facto indirect engagement, nor do relations with a subsidiary need to be halted in a blanket manner. The prohibition is conditional upon the involvement, albeit indirect, of such an entity.
- Any salary payments or administrative expenses paid directly by the subsidiary with its own funds, and provided these payments do not have as an object or effect to circumvent prohibitions in the Regulation, would not amount to indirect transactions with the entities named in Annex XIX.
- Any provision of legal services to the subsidiary or the appointment of a court-ordered administrator for the subsidiary and any payments for these services by the subsidiary with its own funds and provided these payments do not have as an object or effect to circumvent prohibitions in the Regulation, would not amount to indirect transactions with the entities named in Annex.
- Generally, with regards to the provision of legal services, note that Article 5aa should be interpreted in light of the fundamental rights protected under the Charter, in particular the right of defence. Accordingly, the transaction ban should not affect the provision of services that are strictly necessary for the exercise of the right of defence in judicial proceedings and the right to an effective legal remedy. This is not subject to a derogation by the national competent authorities.
- The wind-down period runs until 15 May 2022 (which was granted for 3 months) hence all operations should be finalised by that date, without exception.
- The entities listed under Article 5 of Council Regulation (EU) No 833/2014 can be found in the corresponding Annexes. On the determination of whether an entity is acting on behalf of or at the direction of one of these entities, we recommend consulting the Commission opinion of 17 October 2019 as various considarations are taken into account.