FAS TASK IS TO CREATE CLEAR AND UNDERSTANDABLE RULES IN TH LAW ON FOREIGN INVESTMENTS
Legislative initiative of the FAS Department for Control over Foreign Investments are in TOP-10 best achievements of FAS Central Office in 2018
On 31 May 2018, the President of the Russian Federation signed No.122-FZ Federal Law “On amendments to some legislative acts in the part of clarifying the concept of “foreign investor”.
An essential novelty is replacing the principle of territorial jurisdiction of a foreign company (upon its registration in an offshore jurisdiction) with the principle of pre-disclosure of information to the antimonopoly body about its beneficiaries, beneficial owners and controllers that is now applied by the Government Commission for Control over Foreign Investments in the Russian Federation to approve transactions by foreign investors.
Head of FAS Igor Artemiev commented the amendments: “During the years of applying No.57-FZ Federal Law a liberalization trend has formed in the field of control over foreign investments. An automatic ban for attracting foreign investments in strategic sectors due to their “wrong” jurisdiction is replaced with a more flexible, in our opinion, regime: the ban is in place only for those foreign companies that do not wish to disclose those who are behind them. We are confident that the amendments will improve the investment climate in Russia”.
Under the new law FAS is given the powers to give explanations on applying No.57-FZ Federal Law.
Also, on 1 December 2018 the Government of the Russian Federation approved the Rules 1, according to which foreign investors – legal entities and organizations that are not legal entities and organizations under their control must submit information to FAS about their beneficiaries, beneficial owners and controllers. The Rules also include list information that must be submitted to FAS and its content, the time line for submission and the up-to-dateness conditions.
Head of FAS Department for Control over Foreign Investments, Olesya Milchakova explained: “In practice No. 1456 Rules pursue the “disclosure” concept of No.122-FZ, giving a particular list of information about the ownership structure of a foreign investor, that must be presented to the antimonopoly body, and specifies cases when such information is given by a foreign investor as part of a pre- or post-merger notification or a separate document. Submitting information to the antimonopoly body under No. 1456 Rules, foreign investors are able to complete an earlier banned transaction or use exceptions under No.57-FZ Federal Law”.
“The main goal of all changes is to set clear, understandable and transparent rules, avoid ambiguous interpretation of the law by all parties – foreign investors, the antimonopoly body, other federal executive bodies with whom FAS jointly prepares documents for the Government Commission for Control over Foreign Investments in the Russian Federation, and legal firms that service these transactions. Russian law on foreign investments in principles is not a banning law. Observing particular, not complicated rules set by the law; it is possible to invest in nearly any facility, including strategic companies. We are now improving the rules and the process is not over yet”, summed up Deputy Head of FAS Andrey Tsyganov.