AMBIGUITIES REGARDING STANDARDS OF “ANY TRANSACTIONS” WERE LEVELED OUT

To enforce Part 5 Article 6 of No. 160-FZ Federal Law “On foreign investments” of 09.07.1999, the Chairman of the Government of the Russian Federation approved amendments to No. 510¹ and 838² Decrees

After amendments were made in 2017 to No. 160-FZ Federal Law to support national defence and state security, upon a decision of the Chairman of the Government Commission for control over foreign investments in the Russian Federation, transactions completed by foreign investors with regard to Russian economic entities can be referred to the Government Commission under the procedure specified in No. 57-FZ Federal Law.

No. 430 and 431 Decrees of the Government of the Russian Federation of 09.04.2018 formalized the procedure for enforcing the above norm.  

Deputy Head of FAS Andrey Tsyganov pointed out: “We have been long working on legislative formalization of such a possibility. A single Article of even the most perfect law cannot contain all variants of potential threats for the national defence and state security, and even a small company can fabricate a unique component, without which an entire nuclear power plant will not be able to function or a rocket cannot be launched. At the same time, this norm is of exclusive nature and its application will be pinpointed. Certainly, this norm of the law required detailed regulation at the sub-statutory level”.

Head of FAS Department for Control over Foreign Investments, Olesya Melchakova, believes that the amendments to the Decree of the Government of the Russian Federation reduce uncertainty for foreign investors: “After the norm on “any transactions” was introduced, there were a lot of enquiries about the procedure for applying it.  Now all answers are given in the normative act. The most important for us is that the procedure is pretty fast and non-bureaucratic, the decision-making timeframe is reduced to the minimum, which means that administrative barriers and additional burden upon business are not created”.

¹ “On the Government Commission for control over foreign investment in the Russian Federation”

² “On approving the Rules for transaction preapproval and coordinating establishment of control by foreign investors or a group of persons, comprising a foreign investor, over economic entities of strategic importance for national defence and state security”