Transactions by Foreign Investors in Respect of Russian Businesses Became Subject to Discretionary Governmental Control

August 4, 2017

On July 30, 2017, new Federal Law No. 165-FZ of July 18, 2017 entered into effect, introducing amendments (the “Amendments”) to Federal Law No. 160-FZ “On Foreign Investments in the Russian Federation” of July 9, 1999 and Federal Law No. 57-FZ “On the Order of Accomplishing Foreign Investment in Entities Having Strategic Importance for Procuring State Defence and Security” of April 29, 2008 (the “FSIL”).

The Amendments, among other things, granted the Government of the Russian Federation a discretionary power to decide whether a transaction by a foreign investor in respect of any business entity incorporated in Russia is subject to a prior governmental control in accordance with the procedure set forth by the FSIL, even if such transaction does not involve any strategically important Russian entity. Significant changes were also introduced into the FSIL. The alert memorandum summarizes the key provisions of the Amendments.