The law on foreign investments improves continuously

Changes concern the enactments regulating control over Russian strategic economic entities, transactions of offshore companies and the work of the Government Commission on Foreign Investments

No. 155-FZ Federal Law of 01.07.2017 makes amendments to Article 2 of No. 57-FZ Federal Law in the part of prohibiting control over Russian strategic economic entities by legal entities, registered in the foreign states or areas included in the List, approved by the Ministry of Finances, of the states and areas that provide preferential tax treatment and (or) do not require disclosing and submitting information in the course of financial operations (offshore zones). The List is approved by No. 108n Order of the Ministry of Finances of 13.11.2007.

Transactions by offshore companies to directly or indirectly acquiring over 25% stock (shares) of strategic economic entities, over 5% stock (shares) of strategic economic entities – subsurface users, or offshore companies acquiring other possibility to block decisions of the corporate bodies of such economic entities, are subject to preliminary approval by the Government Commission on Foreign Investments in the Russian Federation.

No.165-FZ Federal Law of 18.07.2017 makes amendments to No. 57-FZ Federal Law in the part of specifying strategic activities, statutorization of the citizens of  the Russian Federation, who are also citizens of other countries, as foreign investors, and some other novelties.

Article 6 of No. 160-FZ Federal Law has now a new norm that by a decision of the Chairman of the Government Commission on Foreign Investments in the Russian Federation any transactions concluded by foreign investors with Russian economic entities in the strategic areas for national defence and state security can be considered by the Government Commission.

Commenting the changes to the legislation, Head of FAS Department for Control over Foreign Investments, Andrey Yunak, pointed out: “These amendments are designed to eliminate legal loopholes in the laws on foreign investments. At the same time, the legislator clearly indicates that investors operating in the fields associated with Russian national defence and security must be especially careful to comply with the law. Apart from that, No.155 Federal Law coming into effect, which is fully within the logic of economic de-offshorization – the objective declared by the President of Russia - will enhance transparency of transactions and further operations of foreign companies on the Russian market. FAS believes that clear and understandable rules meet the interests of both investors and the regulator, and what is especially important, the society in general”.