STATE DUMA ADOPTED IN THE FIRST READING DRAFT LAW CLARIFYING LEGAL CONSEQUENCES OF THE INVALIDITY OF TRANSACTIONS
The changes envisaged are aimed at ensuring legal certainty in the sphere of control over the implementation of foreign investments in the Russian Federation
The draft law clarifies the procedure for the court to apply the consequences of the invalidity of an insignificant transaction made in violation of the current legislation on foreign investment.
The amendments proposed by the authority relate only to cases of violation of the legislation when unscrupulous foreign investors illegally acquired the property of a strategic company or a share in it.
The possibility of applying the mechanism of transfer of shares/parts/corporate rights/property in favor of the state already exists in the Law on Foreign Investments.* With this draft law** FAS Russia details the legislation in accordance with the law enforcement practice of the authority.
At the moment, Article 15 of Federal Law No. 57-FZ determines that transactions made in violation of its provisions are void. At the same time, the court on the claim of FAS Russia in respect of such transactions applies the consequences of their invalidity in accordance with civil law.
According to the draft law, if an unscrupulous foreign investor has established illegal control over a Russian strategic company, that is, he has made an insignificant transaction, then as one of the consequences of such a transaction, the shares of the strategic company and its income that such a foreign investor received as a result of an illegal transaction can be recovered by the court to the state's income.
The document also establishes the possibility of recovery from a foreign investor on the claim of an economic strategic company of the losses caused and compensation for damage.
Besides, FAS Russia also draws attention to the fact that the amendments provided for in the draft law apply only to economic entities of strategic importance for the defence of the country and the security of the state.
* 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 Defence and State Security"
** Draft Federal Law No. 260065-8 "On Amendments to Article 15 of the Federal Law "On the Procedure for Foreign Investments in Business Entities of Strategic Importance for Ensuring the Defenсe and Security of the State"