Putin signs law on foreign participation in strategic companies


Russian President Vladimir Putin signed the law specifying the procedure for foreign investment in business entities of strategic importance for national defense and state security. The document was published on the official website of legal information, TASS reports.

The introduced changes permit the participation of foreign contractors in authorized capital of business entities of strategic importance for defensive ability of the country, with a share of up to 49 percent. The Russian Federation shall take control over such companies.

The document also simplifies the procedure for considering applications from foreign investors and removing administrative barriers that prevent foreign investors from investing in the Russian economy. To achieve this, the provisions of the law shall not apply to foreign investment in strategic business entities, if on the date of a relevant transaction, Russia has the right to directly or indirectly control more than 50% of shares in authorized capital, retaining the right for this after the transactions are concluded.

The document eliminates the need for prior government approval for the transactions, when a buyer of a strategic stake in a business entities is a company that remains under the control of the Russian Federation, a subject of the Russian Federation or Russian citizens. The document also excludes preliminary government approval of transactions in respect of business entities engaged in the use of areas of Earth's depths of federal importance, if the transactions are committed at the time when investors own more than 75% of shares in the authorized capital of such companies.

At the same time, obtaining prior approval will be required for transactions involving the acquisition, possession or use of property that belongs to basic production facilities of strategic business entities, the cost of which accounts for not less than 25% of the book value of their assets. A foreign investor or a group of persons, at whose request prior agreement has been received during the term of this decision may acquire as a result of one or more transactions the property, the value of which does not exceed the agreed percentage of the balance cost of the book value of business entity's assets.


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Author`s name Dmitry Sudakov