After months of negotiations, Finland's Nokian Tyres was on the cusp late last year of finalising a 400-million-euro ($440.32 million) sale of its Russian business. Then Moscow changed the rules again.
The government in December demanded that companies leaving Russia sell their operations for at least half price and claimed 10% of the sale for the federal budget, termed an "exit tax" by the U.S. Treasury.
Nokian Tyres dropped the agreed sale price to Russian oil major Tatneft to 286 million euros, finally securing the approval of the government commission that monitors foreign investment in March, nine months after initiating its "controlled exit".
Nokian Tyres' protracted departure illustrates the growing headwinds faced by Western companies that have yet to fully depart the country. Fifteen months after Moscow's invasion of Ukraine prompted a mass exodus, firms still there face growing uncertainty.
"The war changed the operating environment in a rapid and unpredictable way," Nokian Tyres' Chief Transformation Officer Johanna Horsma told Reuters. "The new changes in the regulations in Russia in September and December had a major impact."
From telecoms companies to fashion retailers, thousands of firms halted operations in Russia last year as Western governments imposed sanctions.
Some managed to negotiate swift exits, often selling at huge discounts or handing the keys to local management.
The pace of exits has now slowed substantially but the rules are even harder to navigate for those remaining.
Nationalising assets by presidential decree - a constant threat - was exploited in April with the seizure of assets owned by Finland's Fortum and Germany's Uniper.
Gaining government commission approval is very demanding, time-consuming and difficult, said Dr Peter Wand, a partner at Baker McKenzie in Frankfurt, who worked on Nokian Tyres' exit.
The appraisal process, which requires a Russian evaluation of the business, was particularly lengthy, he said, with the ever-tightening sanctions regime demanding constant compliance checks.
"From a Western perspective, you would expect more flesh to the bone describing the process and deadlines," said Wand. Additional valuation requirements published in mid-December came in the middle of Nokian Tyres' transaction, he added.
Thomas Kormendi, CEO of Norwegian packaging firm Elopak , which finalised the sale of its Russian business to local management in March for an undisclosed fee, said "the unknown" was the overriding problem.
"You have much, much less visibility on the external factors than you would normally have on any other business deal," said Kormendi, who had the impression that the commission was overwhelmed with the number of applications to process.
"We were grouped with other companies and were given instructions...probably because they simply did not have the resources needed to address everyone one by one," he said.
Deputy Finance Minister Alexei Moiseev last month said the one-off nature of each decision explains why the process is not quick, saying the commission meets three to four times a week and considers 20 issues each time.
"Foreigners should not be let off at full price...it should be hard for them," Moiseev said, with exceptions made when it suits Russia. "That is, when it is better for us that foreigners leave in a civilised way, rather than quitting and just locking up the business they owned."
Russian buyers are seeking to take advantage of the huge discounts and using well-placed contacts to push deals through, according to one Western investor still owning Russian assets.
The buyer needs to be well selected to avoid scammers, said Nokian Tyres' Horsma. Many Russian buyers were opportunists simultaneously involved in other large-scale exits or negotiations, she said.
Companies' relations with the government are crucial, said Tatiana Stanovaya, founder of the R.Politik analysis firm.
"It depends a lot on what personal relationship a foreign company has with the government and whether it has influential partners in the Russian leadership," she said.
Kormendi, who described nationalisation as any company's "worst nightmare", said Elopak had agreed to a six-year buyback clause, mirroring deals made by many exiting firms.
Baker McKenzie's Wand warned that time was running out for those remaining.
"If you cannot sell in time there comes a point where you may not have the cash to continue operations," he said. "The clock ticks fast for those still in Russia."
