STATE DUMA ADOPTED DRAFT LAW ON DEOFFSHORIZATION OF THE ECONOMY PREPARED BY FAS

Document proposes to cancel approval of transactions entailing the restoration of control under the antimonopoly legislation, if the company was released from such control after March 17, 2014.

The initiative of the antimonopoly authority provides the elimination of administrative barriers in the procedure for restoring the beneficial owner's control over a foreign company. There are situations where the company was previously re-registered as an international company in special administrative regions. Thus, the approval of transactions entailing the restoration of such control within the framework of the Law on Protection of Competition will not be required. At the same time, certain conditions must be met. Firstly, control should be established to the same extent, and the transaction should be made within 10 years after the law enters into force. Secondly, information about the beneficial owner must be disclosed earlier when registering the company as an international one in one of the administrative districts.

Currently, in the territory of the Russian Federation there are two such districts: the territories of Primorsky Krai (Russky Island) and Kaliningrad Region (Oktyabrsky Island). In total, more than 70 international companies are registered there.

If under the control of an international company there is a business entity of strategic importance for ensuring the defense of the country and the security of the state, then a simplified procedure for approving such transactions is provided for when restoring control**.

"The draft law is aimed at ensuring the implementation of the tasks set by the President of the Russian Federation***. That means creating a favorable business environment in the territory of the country, increasing the attractiveness of the Russian jurisdiction for Russian and foreign investors as well as deoffshorization of the Russian economy" - said Andrey Tsyganov, Deputy Head of the FAS Russia, during the plenary session of the State Duma.

* Draft Law No. 1214051-7 "On Amendments to Articles 28 and 29 of the Federal Law "On Protection of Competition" and the Federal Law "On the Procedure for Foreign Investments in Business Entities of Strategic Importance for Ensuring National Defense and State Security""

** In accordance with Federal Law No. 57-FZ of April 29, 2008 "On the Procedure for Foreign Investments in Business Entities of Strategic Importance for Ensuring the Country's Defense and State Security"

*** Decree of the President of the Russian Federation No. 400 dated 02.07.2021 "On the National Security Strategy of the Russian Federation"