DETAILING PROCEDURES GUARANTEES OBSERVING THE RIGHTS OF FOREIGN INVESTORS

Amendments to the Regulations on the Governmental Commission for Control over Foreign Investments

The Russian Government made amendments to the Regulations on the Government Commission for Control over Foreign Investments in the Russian Federation [1].

The amendments detail the procedure of the work of federal executive bodies on considering transactions by foreign companies with Russian companies based on No. 160-FZ Federal Law [2].

According to decisions by Commission Chairman [3], the Commission can consider any transaction of a foreign entity regarding any non-strategic Russian company as well as transactions of foreign entities on acquiring the right enabling directly or indirectly manage minority shareholding of strategic Russian companies.

Head of FAS Department for Control over Foreign Investments, Olesya Milchakova commented: “In practice this norm is applied on an exclusive, case-by-case basis, determined first of all by the specifics and scale of operations of a particular Russian company. The new procedure obligates FAS to notify foreign investors in five days that the transactions planned by the investor is analyzed in terms of whether is must be preapproved by the Governmental Commission”.

At the same time [4] the antimonopoly body must inform foreign investors that the transactions must be suspended until FAS issues a decision that there is no need to inform the Commission Chairman about the transactions or the transactions must be preapproved by the Governmental Commission. FAS must also request opinions of all interested authorities.

Deputy Head of FAS Andrey Tsyganov pointed out: “Preventative briefing of investors decreases significantly any possible adverse consequences of such transactions for the foreign investors as well as the Russian state, which definitely meets the interests of all parties. Detailing the procedure of the work of the authorities also guarantees the right of foreign investors in terms of the certainty of legal regulation when they invest in Russian economic entities”.

The Regulations on the Governmental Commission was added the norm on the need to inform the Chairman of the Governmental Commission about the facts of executing transactions by foreign investors and possibility to apply the consequences specified by Article 15 of No. 57-FZ Federal Law [5] to such transactions.

[1] No. 711 Decree of the Government of the Russian Federation “On amendments to Clause 4¹ of the Regulations on the Governmental Commission for Control over Foreign Investments in the Russian Federation” of 03.06.2019.

[2] No. 160-FZ Federal Law “On foreign investments in the Russian Federation” of 09.07.1999.

[3] Part 5 Article 6 of No. 160-FZ Federal Law

[4] Under No. 711 Decree of the Government of the Russian Federation

[5] No. 57-FZ Federal Law “On the procedure of foreign investments in economic entities of strategic importance for national defence and state security” of 29.04.2008