ANDREY TSYGANOV: PURPOSE OF IMPROVING LAW ON FOREIGN INVESTMENTS IS TO CREATE CLEAR-CUT, TRANSPARENT AND UNDERSTANDABLE RULES

The Expert Council discussed FAS initiatives on amendments to the Law on Foreign Investments

The agenda of FAS Expert Council on 27 June 2019 included changes to the regulatory framework of the foreign investments legislation.

Chairman of the Expert Council, Deputy Head of FAS Andrey Tsyganov reminded that in December 2018 the Government of the Russian Federation approved the Rules¹, specifying the list and content of information to be submitted to FAS as well as its from, deadlines, applicability conditions and the submission procedure.

“The Rules add to the norm of the law concerning submission of information about beneficiaries, beneficial owners and controlling persons to the antimonopoly authority. The Government Commission already considered materials submitted und the new form. It should be pointed out that foreign investors manage to do the task with the help of law firms and consultants. So far there have been no questions or difficulties”, explained Andrey Tsyganov.

Deputy Head of FAS pointed out at 2019 FAS administrative regulations on public services for considering pre-and post-merger petitions and the amendments to the Regulations on the Government Commission passed by the RF Government.

Regarding the expected changes to No. 57-FZ Federal Law, Andrey Tsyganov informed that “the goal of improving the law on foreign investments is to give clear-cut, transparent and understandable legislative rules  for regulating the procedure of foreign investments in strategic companies and eliminate current legal gaps in the law and the exposed discriminatory provisions in the legislation”.

Deputy Head of FAS discussed with the Expert Council its main objectives, which FAS sees as feedback from representatives of the professional and business communities, increasing investors’ awareness of the procedure of foreign investments, interaction with legislative and executive bodies with regard to regulating foreign investments, particularly, for the purpose of shaping a favourable investment climate and drafting recommendations on implementing “investment compliance”.  

“We need expert examination and feedback to correctly improve both the law and enforcement practice. The second our goal is informational.  Representatives of foreign investors are at the Council. And I think that getting first-hand information about what we are working on, how do we do it and what are our perspectives is an essential competitive advantage”,  stated Andrey Tsyganov.

Head of FAS Department for Control over Foreign Investments, Olesya Milchakova informed about FAS draft explanations to No. 57-FZ that contains information regarding some provisions of the law in terms of their interpretation by the Federal Antimonopoly Service.

“We plan to highlight several provisions that cause the most questions in enforcement. For example, disclosing information about the ownership structure of foreign investors, applying exceptions or exemptions under Part 5 Article 2 NS Part 4 Article 4 of the Law on foreign investments. A frequent question in practice is how to interpret and apply the norm on the share of indirect management of a strategic subsoil user by a foreign investor. These and other questions will be spelled out in the Explanations. The Explanations are being drafted by a joint Working Group of FAS and the Antimonopoly Experts Association. It is expected that after discussions with reference groups at the Expert and Methodological Councils, obtaining an opinion of the Legal Department and approving by FAS Presidium, the Explanations will be in the open access”, informedOlesya Milchakova.

Another item on the agenda was implementing antimonopoly compliance in order to prevent violations of the law on foreign investments.

Experts believe that he advantages of implementing it include minimizing some risks, particularly the risk of legal consequences of violating the law on investments and the risk of losing company’s investment attractiveness. The benefits of implementing investment compliance include also enhanced efficiency of corporate management, loyalty and trust of counteragents and the society in general, improved corporate image and reputation due to observing the law of the Russian Federation.

¹ The Rules approved by No. 1456 Decree of the Government of the Russian Federation of  01.12.2018