Dewey & LeBoeuf LLPdl.com
Foreign Strategic Investments Law: Recent Developments
Russian-American Round Table, organized by AmCham, FAS and U.S. Embassy in Moscow
12 April 2012
Roman Dashko
Dewey & LeBoeuf LLP | 2
Foreign Strategic Investments Law (“FSIL”)Brief Historic Overview
● Adopted in 2008
● Practice of implementation:
– investor applications routinely approved, rate of turn down low
– active FAS practice of clarifications on FSIL issued on individual basis
– court practice related to FSIL is developing
● But in some areas FSIL regime seemed to be unnecessarily strict, e.g.:
– deals where ultimate investors are Russian
– certain activities and industries (e.g., use of medical equipment, food industry)
– specific low thresholds in the natural resources sector
Dewey & LeBoeuf LLP | 3
FSIL 2011 Amendments Summary
● First substantive amendments since FSIL adoption
● No prior FSIL approval is required (Art. 2.3):
– investments by international financial organizations which are parties to international treaties with Russia
– investments by international financial organizations founded under international treaties with Russia
– list of such organizations was approved by Russian Government (Order Nr. 119-p dated 3 February 2012) and includes EBRD, IFC etc.
– post-transaction notification (Art. 14)
continued >
Dewey & LeBoeuf LLP | 4
FSIL 2011 Amendments Summary
● Exceptions from the scope of FSIL application (Art. 2.9):
– transactions between organizations that are controlled by the Russian Federation or controlled by Russian citizens - Russian tax residents (without dual citizenship)
– control is determined by analogy to control over strategic companies (other than in natural resources sector): direct or indirect ownership over 50%, etc.
– neither prior approval nor post-transaction notification is required
continued >
Dewey & LeBoeuf LLP | 5
FSIL 2011 Amendments Summary
● Changes for natural resources companies
– prior approval threshold raised from 10% to 25%
– no approval for acquisition of new shares if shareholding percentage of a foreign investor or a group of companies does not change
– post-transaction notification (Art. 14)
continued >
Dewey & LeBoeuf LLP | 6
FSIL 2011 Amendments Summary
● Exceptions for other industries
– data encryption activities of banks, if no shareholding by the Russian Federation
– organizations handling radioactive equipment or materials, if not primary activity and in the civil sector
● Certain procedural amendments regarding verification of the strategic status of a target company and preparation of an agreement with an investor (if required)
Dewey & LeBoeuf LLP | 7
Future Developments
● Exceptions for other industries (e.g., certain activities in food industry)
● Clarification of interpretation of strategic industries (in connection with licensed activities)
● Simplified procedure for companies in certain industries
● Amendments to the Subsoil Law
● FAS approval as an evidence of non-strategic status of a company
● Others?
Dewey & LeBoeuf LLP
Questions?
The material contained herein does not constitute legal advice. Prior results do not guarantee future performance.© 2012 Dewey & LeBoeuf LLP All rights reserved. Dewey & LeBoeuf LLP is a New York limited liability partnership. For further information on Dewey & LeBoeuf, please visit www.dl.com
Top Related