ANNOUNCEMENT 31 Jul 2020

On 31 July 2020, the Russian government extended the coverage of the mandatory review of foreign investments into the strategic companies to temporary acquisitions. 

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Amendments to Federal Law on procedures for foreign investment in business entities of strategic importance for national defence and state security, http://en.kremlin.ru/acts/news/63782, formalized in the Federal Law dated 31.07.2020 № 255-FZ, http://publication.pravo.gov.ru/Document/Text/0001202007310003, 31 Jul 2020

Inception date: 31 Jul 2020 | Removal date: open ended

FDI: Entry and ownership rule

On 31 July 2020, Russia amended its Federal Law On Procedures for Foreign Investment in Business Entities of Strategic Importance for National Defence and State Security. With the amendments in force, even temporary foreign acquisitions of voting stakes in strategic companies are subject to the government review and approval. Temporary acquisitions include, among others, temporary transfers on the basis of property trust agreements, pledge agreements, repurchase agreements and security deposits. The amendments make it more difficult for foreign investors to gain access to Russian assets. 

The concept of companies of strategic importance was introduced on 29 April 2008, federal law 57-FZ.  The law requires prior clearance for transactions raising the percentage of shareholder votes controlled by foreign private investors to more than 50%. For mining exploration companies, the threshold is 10%. The 42-item list of the types of strategic companies includes natural monopolies (pipelines, railways, airports, terminals, ports, energy, waterways), dominant suppliers in communications, large printing companies and mass media, security-sensitive sectors (aviation security and equipment, firearms and military equipment, space, nuclear, cryptography and encryption, surveillance and its detection, industrial explosives, military-use metals) and fishing.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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